14th April, 2011

Daniel Northall appears as Court of Appeal rejects claim for enhanced redundancy pay

The Court of Appeal (Ward LJ, Leveson LJ and Pitchford LJ) has handed down its decision in Garratt v Mirror Group Newspapers Ltd [2011] EWCA Civ 425 in which Daniel Northall appeared for the successful employer, led by Clive Freedman QC and instructed by DLA Piper UK LLP.

The claim concerned the interpretation and construction of a collective agreement entered into between the British Association of Journalists and MGN on behalf of a bargaining unit of which Mr Garratt was part. The collective agreement provided for an enhanced redundancy payment of a defined amount on an employee being made the subject of a compulsory redundancy.

The dispute at first instance and on appeal concerned whether the right to an enhanced payment was conditional on an employee signing a compromise agreement on termination and whether this obligation could be implied into the contract from the prior practice of only making enhanced payments in such circumstances.

It is often said that for a term to be implied through custom and practice, the term in question must be ‘reasonable, notorious and certain’. However, the authorities did not provide for a consistent approach, with the ‘reasonable, notorious and certain’ factors being applied in some decisions (see, for example, Solectron Scotland Ltd v Roper & Others [2004] IRLR 4); but not others (see, for example, Duke v Reliance Systems Ltd [1982] ICR 449, Quinn v Calder [1996] IRLR 126 and Albion Automotive Limited v Walker [2002] EWCA Civ 946) where a different set of factors was applied.

Although the decision of the Court of Appeal did not attempt to reconcile the language of the various authorities and set out a unified approach, it did suggest that the various tests may be different ways of answering the same essential question: what are the parties to be taken to have agreed against the relevant background? This was a view first expressed by Lord Hoffmann sitting on the Privy Council in Attorney General of Belize and others v Belize Telecom and others [2009] 1 WLR 1988, at paragraph 21 of that decision.

The decision in Garratt may be taken as authority for the proposition that, in implying a contractual term through custom and practice, a court or Tribunal will not err if it does not apply the ‘reasonable, notorious and certain’ factors expressly, provided it has answered the essential question of what the parties are to be taken to have agreed against the relevant background, and has taken account of all material factors in answering that question.

The full text of the Court of Appeal’s judgment can be found HERE

 



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